Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : SOES Trading -- Ignore unavailable to you. Want to Upgrade?

To: Earl Risch who wrote (1540)	7/21/1998 1:40:00 AM
From: saju chacko	Respond to of 1618

i believe that they are only resposible for the first 100s of the 1000s at the price they said.... double check what i said with someone who knows the rules better... Saju

To: Earl Risch who wrote (1540)	7/21/1998 8:13:00 AM
From: LPS5	Respond to of 1618

The market maker only has to reflect the size of his order. I.E., if he has a customer limit order for 100 shares that improves the market by, say, a teeny, he only has to update to reflect 100 shares - not post 1000 at the improved price on the box. If a market maker comes to the inside market with 1000 shares, he can be SOESed (if it's an NM10 stock; if it's an NM5, he can be SOESed for 500 or 200 for an NM2) for the whole grand. Obviously, if he comes to the box with 900, or 500, or 100 of an NM10 stock, he can only get wacked for what he's showing. Imagine this: Formerly, you could, buy 1000 of WXYZ at 20 Hopefully to sell 1000 a short time later at 20 1/8 1/8 = .125 * 1000 = $125...on a 1000 share lot Figure commissions $15.00/ticket, so after $30.00 (in, out) you make $95.00 Now, if the MM comes showing 100 shares WXYZ at 20, and you SOES him for 100 shares, then selling again at 20 1/8, you've made 1/8 = .125 * 100 = $12.50...on a 100 share lot. After commissions...you're in the hole for $17.50. Ouch. In other words, if all the market makers start to post 100 share orders, the bare minimum (which they probably won't in the bigger stocks, but anyway)... You'd have to make about 1 1/8 pts. to make what you formerly did to make after commissions on 1/8. Ask any of the traders here, Earl - how often do you get a straight runner of 1 1/8, and more importantly, how much of that 1 1/8 do you get a piece of? A half? 3/8? IMHO, it's something to keep a close eye on, if you only have SOES and SelectNet at your disposal. If you have Instinet terminal access, ECN access, and/or are registered and can negotiate ACT orders, then you have a little less to worry about. This is also a reason why some of the more experienced traders have added listed trading to their bag of tricks. LPS5